Clip Mask

Create a filled shape using the background color over anything you want to clip out. You can use Priority settings on levels, reference files or elements in a 2d file to put the filled shape on top of everything. In a 3d file you will need to adjust the elevation of the filled shape to be above anything to be clipped.

Great idea.  Thank you.  I might learn MicroStation yet with help.

The colored shapes above are reference to a sheet model. I then placed the rectangle and the circle in the sheet model. Using the Create Region tool I used the following settings.

I think this may give you what you desire.

thats just the way I do this stuff all the time... Eg. dont want to show existing contours crossing over into the proposed road design...and make it hard to see the proposed road design...but want a feel for the lay of the surrounding land ...

Using the filled shapes is an easy way to do this. I use this quite often the other way around - I have to highlight pipe trenches within all the surrounding topography, cables, sewers etc. The only difference is that I make it transparent so I don't have to think too much about update sequences etc..

If for some reason your filled shape covers other references that shouldn't, you can also either adjust this (in addition to what the others proposed) through the reference update sequence (reference manager -> properties -> update sequence) or if that doesn't work use priority settings for the reference itself (right click in the reference title bar and activate "priority").